Shark Tank has its share of success stories, and the proprietors of a Massachusetts cupcake-in-a-jar company, Wicked Good Cupcakes, is among them. In Spring 2013 the family-owned business entered into a deal with shark Kevin O’Leary. The on-air terms included no equity stake, but royalties in exchange for funding.
Now, Wicked Good Cupcakes is bringing another high-profile partner into the fold. Marcus Lemonis, of CNBC’s The Profit, is joining the team. In an official statement released July 11, Wicked Good Cupcakes gave no details about Lemonis’ involvement other than he will help the company to expand its product line and lower shipping rates for West Coast customers.
In stark contrast to Shark Tank negotiations, therefore, and perhaps far more reflective of the real world, the public does not know the terms of Lemonis’ partnership; for example, whether he has an equity stake, a royalty deal like O’Leary or has made other arrangements. It does, however, give a bit of an inside peek as to one way a successful business can grow after it receives Shark Tank funding.
WCVB Channel 5 Boston reported in May 2014 that, in exchange for those royalties on sales, O’Leary funded a commercial kitchen for Wicked Good Cupcakes. Co-owner Tracey Noonan told the Boston Business Journal in March that O’Leary’s royalty deal – $1 for every cupcake until he recouped his investment and 45 cents on every cupcake in perpetuity – has been positive:
“The royalty deal has worked great for us. And that’s ironic because after we aired, I received a ton of emails from people telling me how stupid I was to take that deal.”
In the interview with Channel 5, O’Leary confirmed that deals made on-air are subject to lengthy due diligence, and the Boston bakery was no exception. In the clip, Noonan said Shark Tank amounted to a $4 million commercial, and that sales skyrocketed after their episode aired.
See the channel 5 report below:
As for Lemonis, the Boston Business Journal notes he may help revive Crumbs, the closed chain of high-end cupcake shops.The Wall Street Journal reported today that a bakery Lemonis owns actually was one of Crumbs’ suppliers before Lemonis was in talks to buy out the chain, now in Chapter 11.
Crumbs was criticized for focusing on one product and may diversify if it re-opens. This is of note since Wicked Good Cupcakes plans to expand beyond cupcakes-in-a-jar to cheesecakes-in-a-jar, pies-in-a-jar, brownies-in-a-jar, and even gluten-free products.
Shark Kevin O’Leary, in the above clip from Channel 5, is seen sampling a gluten-free item and quips: “Yeah, I think we can make some money on this. That doesn’t taste like crap.”
ABC is set to premiere a new season of Shark Tank on Friday, September 26.
[Images: Left: WCVB/Right: Modern Luxury]